IMF cuts India’s GDP growth rate to 6.6% due to demonetization

The Washington D C based International Monetary Fund (IMF) has cut India’s Gross Domestic Product (GDP) growth rate from 7.6% to 6.6% for the year 2016 – 2017. This comes days after the World Bank also downgraded India’s GDP growth rate.

The IMF has said that it downgraded the growth forecast for India due to the temporary negative consumption shock that has been induced by cash shortage and payment disruption that has happened due to the recent demonetization of the Indian currency notes of Rs 500 and Rs 1000, which accounted for over 85% of the Indian cash circulation. The IMF made these comments in its recent World Economic Outlook (WEO) report.

The IMF has also said, that although the year 2016 did not show a lot of economic activity, the coming years of 2017 and 2018 show a lot of promise and economic activity is bound to pick up in developing and emerging market economies.

The global growth forecast has been put at 3.1%, while the economic activity in Emerging Market and Developing Economies (EMDE) has been forecasted to grow by 3.6% in the coming years of 2017 – 2018.